AI Is Making Due-On-Sale Clauses Matter Again

The fastest way to lose money in real estate is to win the deal and fumble the loan. We talk with Jonathan Yoo from Convoy Home Loans about investor financing that’s built for how real investors operate: moving fast, protecting downside, and qualifying based on the asset not just a neat W-2. If you’ve been hearing about DSCR loans, bank statement loans, and other non-QM mortgage options, this conversation turns the buzzwords into a clear decision framework.

We get specific about what DSCR actually measures, why 1 to 4 unit rentals can underwrite differently than commercial property, and how terms change when coverage is strong or weak. Then we tackle a topic more investors need to take seriously: closing in an LLC, the fine print that makes “transfer it later” risky, and how AI tools are giving servicers new ways to detect title and vesting changes. Subject-to deals and due-on-sale clauses have lived in a gray zone for years, and the monitoring environment is not what it used to be.

From there we zoom out to the market: mortgage rates, the 10-year treasury, why the bond market matters, and why short fixed periods can create forced refinance pain. Jonathan also shares three actionable tips for newer investors around liquidity and reserves, repair and lease-up reality, and making sure the numbers work with a real buffer.

If you want a smarter way to finance rentals and build a portfolio that survives volatility, press play. Subscribe, share this with an investor friend, and leave a five-star review with one sentence about what you learned.

Laugh Love Law

Real conversations. Real people. Real impact. A podcast about life, law and...

Listen on: Apple Podcasts   Spotify

Transcript

Welcome And Quick Call To Action

Dwan Bent-Twyford 0:47

Hey everybody, welcome to the most Dwanderful real estate podcast ever. I'm your host, Dwan Bent-Twyford. I am America's most thought-after real estate investor, and I'm really excited that you are here with me today. So I took the name Dwan and the word wonderful and made Dwanderful. That's how we became a Dwanderful universe. So if you're not already following me, go to Dwanderful.com, D-W-A-N- D-E-R-F-U-L dot com, dwanderful.com, and opt in, take my real estate investing quiz. Then if you take the quiz and fill out the form and I'll have a 30-minute conversation with you, just me and you, one-on-one. No pressure, no strength, no nothing. And we'll just talk about what it is you are doing in your real estate career and what you want to do, where you want to go. You can find me on all socials, just type in Dwanderful. I'm on everything, everywhere under the wonderful. So I'm super excited to have uh guest today. He is so adorable. We've been talking for a few minutes before we started on today. So this is Jonathan Yoo. So, Jonathan, how are you today?

Jonathan Yoo 1:57

I'm great. Thank you so much for having us on.

Dwan Bent-Twyford 2:00

Yeah, I'm really excited you guys are here today. He's from Korea, so I was telling him about my visit when I took uh Bill and I took all the kids that went to Korea and stayed for, I don't know, like three weeks. We had the best time. And so what I like to do, Jonathan, is I actually just kind of throw my guests to the wolves. I want you to just tell us briefly your name, how to find you on all of your social media, and the name of your company, or what you do, but like in just a couple sentences, and uh then I'm gonna ask you some questions. So we want to know what's your deal.

Jonathan Yoo 2:35

So my name's Jonathan. I started Convoy about almost six years now ago, and uh, we've grown to become, in terms of the DSCR world, probably the biggest DSCR broker in the nation. Um, for non-conventional loans

Meet Convoy And The Investor Niche

Jonathan Yoo 2:50

in general, we're the second largest in the nation. And the reason I specify non-conventional is because um in 2021, 2020, think back to that time when rates were 1%, 2%, at the high of 3%. My partner and I, Dustin, who's supposed to be here, imagine. We've uh we we started the company and we said we got to niche ourselves into something else because investors are really underserved. And so what we did was we were one of the first brokers to actually bring these non-conventional market loans to market. So DSCR, bank statement, profit and loss, those types of loans, um, and do them on a massive scale. And we essentially didn't do as much conventional and we swayed towards the investors. So we specifically dug our heels into the investor channel and the luxury channel, and that's kind of how we've built our business up until this point. And yeah, so now we're we're gonna follow the socials.

Dwan Bent-Twyford 3:45

How do we find you? Yeah, so go you got there.

Jonathan Yoo 3:48

Yeah, so we can get to you can find us on the app store and also Google Play Store if you just look up Convoy Home Loans. It's on there. Um, if you look up Convoy Home Loans on Instagram, convoy underscore home loans, you're gonna see us pop up as well. Um, but I think the easiest way to get a hold of us and find us is probably the Google Play Store app store. Or if you just Google Convoy Home Loans, we're the we're probably the first one that pops up. Yeah.

Dwan Bent-Twyford 4:13

That's nice. That's nice.

Jonathan Yoo 4:15

Yeah.

Dwan Bent-Twyford 4:16

So well, good for you guys. And so what I do like is that you said um you work more towards investors. So and I do like that because I feel like, you know, anyone that's trying to be an investor or fix up houses or buy commercial or anything like that, I feel like they really are underserved because there's just so many like lenders out there, but not really that specific specifically lend to uh within to investing. So when you guys say like you gear towards investors, like in what area? Like how what do you do? I come in. What am I doing?

Jonathan Yoo 4:56

Can I just so there's a lot of there's a lot of misconceptions on uh non-conventional loans saying that they're potentially higher rates um or less inferior terms to like conventional type loans that the banks will give. Um, because we do so much volume as it is right now, a lot of the lenders that we work with and a lot of the funds, like Wall Street hedge funds that we work with will take a less margin on their rates. So actually, the rates that we have sometimes are actually better than conventional loans. And sometimes they're actually at at least at matching with what conventional is right

Why Non-Conventional Loans Beat The Myths

Jonathan Yoo 5:30

now. And it allows investors not to have to provide tax returns or all the normal stuff that you would have to provide and just be able to qualify on the asset itself, just focus on that, but not have to worry about getting terms that are worse than what, for example, banks are giving or other conventional lenders might be giving. And and the beauty with us actually is we have the conventional loan world. Like we've been doing that for 10 plus years. So, conventional, if you want to go that way or if someone wants to go that way, we can do that as well. But if you don't want to go that way, you want to for sure put it into an LLC because you know, people don't talk about it enough. But conventional, you're not supposed to put it into an LLC, right? That's not how the loans are written. It's actually in your loan documentation that you're not supposed to be changing out vesting that way into another entity. DSCR or the non-conventional world allows you to close directly into the LLC or the S Corp or the C Corp, whatever entity you're trying to close in. And all you do is sign loan documents as a member or manager of that LLC. The personal guarantee aspect of it, if it's a residential property in most cases, but that allows you to really take advantage of having it separated into the LLC or an entity versus in your personal name.

Dwan Bent-Twyford 6:43

No, I know. Their banks will never let you close into an LLC.

Jonathan Yoo 6:47

Yeah. They usually want you to do something at like the loan officers, obviously, what they'll tell you is, oh, just close in your personal name and then switch it over later, right? But technically speaking, that's in in if you look at the loan documents that you sign with are like a thousand pages, right? But if you actually go through the thousand page loan document, you'll see that you're not supposed to be changing vesting to an LLC or another entity that's not you as an individual after closing. Now, the chances of you getting audited and you getting caught are might be slim, right? It's never zero, might be slim. But I think I've been seeing it more happen now than before because now these servicers, which are the people that buy the notes and service the notes, get your payments, send out payments, yeah, they are starting to utilize AI, right? And

LLC Closings And AI Loan Surveillance

Jonathan Yoo 7:35

with AI, they are starting to see which titles are actually held by the original borrower, which aren't. So subject two, which is you've kind of been a massive wave of people trying to buy properties, subject to properties, right? Wraparound notes, like those some of those people I've been speaking to having issues because their bank sent them a notice saying that you can't do what you're doing right now, and you either need to sell the property or refinance it out.

Dwan Bent-Twyford 8:03

And so do it on sale clause.

Jonathan Yoo 8:05

They they've I've been seeing more of those happen.

Dwan Bent-Twyford 8:07

And again, I've never seen that happen yet, but I'm starting to.

Jonathan Yoo 8:13

They are, and it's and it's actually happening more often in the last 12 months than I've seen ever in the last you know 10 years in business. And I think the reason why is again the power of AI, right? People are these these servicers are not dumb, right? They they're they might be a little blind, right? They might not have 2020 vision, but they're not dumb. So they are now utilizing AI. And a lot of the servicers that we've been talking to, they they know what's going on, right? It's just more of a matter of is it worth for them to actually go after them or not, right? But they know what's going on. So that AI tool is really coming into play there. So if you want to do things right correctly, right, the first time, yeah. That's why a lot of investors are shifting over to this product versus just going conventional.

Dwan Bent-Twyford 9:00

Yeah, no, I agree because it's funny because when I uh teach my two-day workshops, I teach a session on subject two. Because subject two is like a great way to get rentals and people feed the house to you, you take it over, you rent it, or uh, I like to sell them own financing, like just whatever. It's a really great way to help someone get out of their loan, get them some money, get them moved out, get their payments back current, you know, and do a subject two. And every time, I mean, for 20 years, people go, what about the do on sale clause? It's always the first question out of everybody's mouth. I'm like, honey, I've never in 20 years seen anyone call due on sale clause. I see now I'm gonna have to keep in mind that things are changing a little bit.

Jonathan Yoo 9:39

Yeah, but if you're doing it the right, I think there's a right way to do it and the wrong way to do it, right? Some people will just change on title and just make the payments to the person instead of creating, you know, any other note or any other form of um, you know, title vesting, whatnot that needs to be done for trail, right? Um, that typically allows for a little bit more of a leeway situation. I don't want to say it always does because again, like these documents that people are signing that they don't read, right? Thousands of pages on loan documents. They think it's a great idea to do subject to. And a lot of times, like you said, it's a great way to acquire real estate. However, the only problem right now that people are running into now that I'm seeing is AI, right? So people are like these servicing companies, they've invested a lot of money into AI. They see what's going on, they're tracking the trends and you know, record keeping and all that. So that's just a word of caution, right? Going forward. I I don't, again, there's never a hundred percent guarantee that you know something's gonna happen one way or the other. You know, someone might, you know, and people might come out and say, I've had a you know, subject to you for 40 years and I've never had any problems, like, you know, good on you.

Dwan Bent-Twyford 10:51

Um, but it doesn't mean you can't say 100% anymore.

Jonathan Yoo 10:55

Yeah, it's it's not there.

Dwan Bent-Twyford 10:57

It's yeah, you can't say 100% anymore. And you know, with AI, AI can go through documents and read documents and and go through all the things that like a human really couldn't do. Yeah. There's a stack and nobody signs those. So you guys are are doing sort of like hard money lending. Is that what it is?

Jonathan Yoo 11:13

No, I mean we do a little bit of that too for fix and flip type stuff, but the majority of uh loans that we try to focus on because um because we do so much volume, a lot of our lenders and a lot of the Wall Street hedge funds will securitize our debt um and then sell it. So we

DSCR Explained For 1 To 4 Units

Jonathan Yoo 11:30

we focus more so on like right now, I would say about 80% of the volume we do is DSCR, like debt service coverage ratio loans, um, and bank statement and profit and loss, like self-employment. Yeah, so debt service coverage ratio, uh, which is probably, I think, the best product that's come out for investors in ever, right? It existed for forever in the commercial world, right? So commercial, anything over four units is considered commercial or mixed-use properties with retail and residential are considered commercial. Those properties have had DSCR for however long, right? Now, five, six years ago, DSCR started rolling out for residential properties, one to four units. And with those one to four units, DSCR came out. Now you can qualify based on just the rental income of the property. But the underwriting is actually a lot simpler. So commercial properties will take an expense ratio, they'll take vacancies, they'll take management fees, all that stuff off of it, and calculate your debt coverage ratio off the NOI, which is the net operating income. On residential, they don't do that. They'll take it off the gross. So it'll be gross income and then compare it against your principal interest, tax, and insurance. And if you have association, association dues. And that's it. As long as it covers on that scale, on that number, at least at 100%, you're, you know, you're gonna get good terms. If it's below 100% on the coverage, right, you have to mess with it a little bit. If you can't get it over 100%, then you could still close on it, but it won't be the better terms that, you know, for example, 100% coverage or even above that would end up being.

Dwan Bent-Twyford 13:43

No, I like that. But what do you guys like to lend on? Like what's your what's your favorite area? Do you lend on uh if I want to do like a rehab, or there's short-term loans for rehabbing? Um, if I want to buy a duplex, a triplex, if I want to buy a building or a mixed-use building, like where's your happy spot?

Jonathan Yoo 14:04

So we we operate in all 50 states. So geographically it's not, there's no restrictions. But in terms of property type, like I think you're gonna get the best terms in on one to four units, right? Whether that be a condo, single family or townhouse as the single unit, up to four units, because then you can you know confidently get 30-year fixed financing. Because a lot of commercial financing, if you want lower rates, typically ends up being like three year, five year, seven-year fixed. Um, which unfortunately, and this is actually the perfect time to talk about this, right? Because if you look in, just look right now, right where we are, 2026. Uh, anyone that got into a five-year fixed arm for a 2% back in 2021 is now having to refinance, and a lot of people are having to put money in to refinance, or they are not able to refinance a lot at all, and they're having to sell, right? So I'm sure you've seen like, you know, Brandon Turner's a huge thing, right? In in the real estate investment community. He recently had just released, you know, statement saying that, you know, he lost $15 million on a property, right? Selling it. Um, and he publicized that on on Twitter and or X, I mean, and on Instagram. And the reason one of the points that he put in there is buy time on your side, because he had bought the debt with like, I think, three year or four-year financing. And that is true today, I think more than ever, because with the market, we kind of talked before uh we got hopped on camera, but the market is kind of in a in probably the most tumult tumultuous stage we've seen since like COVID.

Dwan Bent-Twyford 15:40

Let's talk about that. Let's talk about that. Yeah, wait, wait, wait, let's talk about that on the show. Yeah, I agree with that.

Jonathan Yoo 15:47

Yeah. So, like we're if if uh mortgage rates for the residential properties, especially 30-year fixed

Market Volatility And The Case For Fixed

Jonathan Yoo 15:54

debt, is typically tied to longer-term treasuries, right? It's how you can track whether mortgage rates are going up or down. The 10-year treasury today, um, and even a couple of days ago when it was at its highest point, we were we're basically at the same treasury levels that we were at back in 2006, 2007. And if you remember 2006, 2007, going into 2008, like we're talking about an increase and then a crash, right? So I think the market is telling us something, and the and people are so obsessed with mortgage rates and the federal funds reserve rate and kind of the stock, how stocks are hitting all-time highs, they're not really looking at bonds. But where smart money is really looking and where these hedge funds are looking, and where everyone's kind of forecasting is the bond market, right? How much of a premium is it to trade that money, trade that debt right now on the market, right? Are they having to increase yields to try to coerce investors to buy bonds? Right. That's kind of like where people have to be looking, I think, right now, uh, especially in this market versus any other market. Stock market, can't believe it, right? We're hitting all-time highs when employment is supposedly okay, but I'm seeing my peers left and right looking for jobs, right? Um, housing is supposedly strong and supposedly not having that many defaults, but we're seeing defaults still increase on a year-to-year basis, right? Um inflation, right, is seemingly supposedly under control, but we're recently finding out in the last two months it's not under control. Inflation is starting to go out out of control. So all these things are kind of playing into the factor of now the feds are trying to, like Kevin Warsh, the new Fed chair, is going to change. He wants to change the way that we see inflation, right? So instead of taking month-to-month inflation with CPI, PPI, all those data as points, he wants to do a trend. And the trend is going to change the way that the feds make decisions on their federal funds rate and what you know, what they are planning on and forecasting. Uh and that in itself could be a little bit of an issue, right? Depending on how the bonds are looking at it. And the bonds, the bond market uh doesn't like uncertainty, doesn't like inflation, right? Inflation is the number one enemy of the market because inflation makes everything more expensive. And that's kind of where we are right now. We're in that, we're in that point of time where everything's becoming more inflationary. So I don't think there's a way to avoid that. So again, going back to why time is so important. If you have a 30-year fixed debt versus a five-year fixed or a three-year fixed, right, unless you're really truly planning to exit the market in three or five years, like you can no longer get into a loan on a three or five-year fixed and expect to refinance for anything better or less in the current market.

Dwan Bent-Twyford 18:50

Yeah, no, because I agree. People don't understand, like, well, why did everything crash? That's because all these people were refinancing their house for remember the commercial? Uh well, I don't know. You're pretty young, you might not remember the commercial. They would say, refinance your house for 125% of its value. Do add-ons, do garage, do this, do that, da-da-da-da. And they were interest only. And people got like three and five year interest only, which is like this much, and then all of a sudden the interest only is over and your payments that much, and it forced everyone to have to refinance, and then millions refinance at the same time, and the whole entire the whole world just crashed.

Jonathan Yoo 19:36

Yeah. Yeah.

Dwan Bent-Twyford 19:37

It's like, yeah, nowadays, I you know, you gotta be careful thinking ahead.

Jonathan Yoo 19:42

Yeah.

Dwan Bent-Twyford 19:43

Like, what are you actually gonna do in three years? Like, do you have the money? Do you not have the money? Can you roll it over? Can you switch it? Well, like, what can you actually do? Because I think if nothing, that market, I hope it taught people to like look a little bit further ahead instead of look at this cheap mortgage payment today that ended up blowing up the market three years later.

Jonathan Yoo 20:07

Yeah. Granted, you know, people have a lot more equity these days than they did back because you're talking about the hundred, 125% loans. Like those don't exist anymore, right? So there is a little bit of a limiting factor there, but the last three, four years have created a lot of new people entering into the market, new investors entering into the market. Um, the Airbnb craze, short-term rental craze was here and gone, right?

Dwan Bent-Twyford 20:32

Um, it's like already kind of like exactly.

Jonathan Yoo 20:37

And and that already, that market already kind of crashed, right? People were losing 50%, 60% on the houses that they bought for short-term rental because they bought it at premiums. Um, so in terms of like equity position wise, like the majority of the market has more equity. So I don't think we'll see that that crash that we saw in 2008 of everyone selling at the same time. But at the same time, there are going to be a lot of distressed opportunities. And that's what we're already seeing right now, right? People are selling. Anyone selling right now uh either has to sell or is, you know, there's one of two classes. They're either not a serious seller, right? Because there's people testing the market, or they have to sell. So you're you either fall in one of those two classes. It's not, it's no longer like uh, oh, you know, I'm a I'm a logical seller that's going to be going into the market, expecting a logical price back based on the market conditions. It's not that anymore. It's you're either needing to sell or you are not a serious seller at all. So if you're not a serious seller at all and you're living back three years ago in terms of prices or four years ago in terms of prices, you're sitting on the market for 120, 180, 365 days. But if you have to sell, like that right there is, I think right now, where a lot of investors, if you're not scared of buying, a lot of our clients are finding good deals in that distressed market because they have to sell. And I think that's where the money is right now. We are probably going to have a hard time finding, I think, over the next 10 to 20, 30 years. I'm sure you might agree that has a buying opportunity, like, you know, in the next 10 to 20, 30 years of what it is right now. Because inflation is going, it's up and it's going to continue to go up. So unless you're in hard assets like real estate, and even Bitcoin these days, it's more tied towards the stock market than it's ever been, right? In terms of buying and selling. So it's like the only thing that you can really touch, feel, live in, you know, have rent out, write off is is really real estate.

Dwan Bent-Twyford 22:50

Right. I agree with you.

Jonathan Yoo 22:52

So right right now, like the the market itself is, I think, positioning itself to weed out anyone that's not a smart investor, and it's going to be driven more towards smarter investors. Because imagine if the rates actually did fall, right? Imagine if they do fall from where they are. Because right now we're right, we're still writing loans actually at like five, eight, seven, five, six percent. So sorry.

Dwan Bent-Twyford 23:16

What is the interest rate today?

Jonathan Yoo 23:18

We're still writing them at five, eight, seven, five to six percent. It's like twenty with like 20, 25% down, right? Very small buy downs, like it's still there. Um, but if we were in, if we're looking at the 10-year treasury chart again right now, like if we were in the same market we were in last year or the year before, rates would be in the sevens and eights. And I think that's where people have that short-term consumers have very short-term memory, right? Of bad news. They don't remember the sevens and eights that we were in before. And they're only thinking about right now where they saw a glimpse these past you know, few months of, oh, it touched five and a half, it touched five, seven, five, it touched six percent, like that's it. But now everything else is average sitting above six percent at six five, six, seven, five.

Dwan Bent-Twyford 24:05

So I don't even think that that's really a super high interest rate. It's not because whenever I was first investing and I was just rehabbing like one or two houses at a time, I had to borrow hard money. And back then, I'm talking 25 years ago, hard money interest rates were like 15% and three points.

Jonathan Yoo 24:27

That's crazy. Because now, yeah, and now it's more like eight or nine percent, you know, on average, is is the hard money side. Like we're we're writing, we're writing a lot of debt for a lot of our fix and flip clients that are higher tier and like eight-ish percent, eight and a half-ish percent, you know, highest nine percent. And like now the margins, I think just margins have slimmed. And because of that, rates are not as high right now than they should be. And again, that's what creates, I think, a perfect buying opportunity for a lot of investors that are entering into the market or trying to expand their portfolio right now. They're gonna get seller credits 100%. Yeah, right. They're gonna get contingencies that they want in terms of time frames, they're gonna be able to buy down the rate, right? Using those seller credits further than they've been able to buy down in the past. And if you buy down a 30-year fixed loan, as long as the property is creating cash flow, you can hold it for however long you need, right? The market out. And then if market decides to drop rates 4%, 3%, like which again, if that happens in our lifetime again, that really means that we have other things to worry about, right? Like our livelihood to really worry about.

Dwan Bent-Twyford 25:40

Well, maybe they do.

Jonathan Yoo 25:42

Yeah, because rates only really like mortgage rates only really drop when it's bad news, right? Bad news creates lower mortgage rates. Um, the federal funds reserve rate, which is what a lot of people have a hard time discerning between when when the feds get up there on TV and start talking about we're cutting rates a quarter percent, that doesn't mean that mortgage rates are going to be cut a quarter percent. That quarter percent cut and every cut that's gonna potentially happen in the future has already been priced into today's rates. So what they're talking about is overnight bank-to-bank lending rates. Okay, that's short term.

Dwan Bent-Twyford 26:20

So I want you if someone um hears you on the podcast today and they call you up, like, hey Jonathan, I heard you over there at Dwander Hall, um, and they call you up for the first time, give me like three actionable tips. Like, what would be the first three things they would have to do to secure a loan or to to actually open the door to to come in and say, hey, I've got some real estate, I need some money. Like give me the first three things they'd have to do to work with you.

Jonathan Yoo 26:52

Are are we talking about a buyer or a person trying to refinance?

Dwan Bent-Twyford 26:56

Um, let's just talk about an investor.

Jonathan Yoo 26:58

An investor that's trying to buy.

Dwan Bent-Twyford 27:00

That's trying to buy. Let's do an investor trying to buy.

Jonathan Yoo 27:02

Okay. So first and foremost, I would say um have reserves, have liquidity. Right. Yep. So what that means is not just enough for

Distressed Deals Seller Credits And Strategy

Jonathan Yoo 27:14

15, 20, 25 down, right? I mean have 20% down or 25% down, plus have reserves for just in case something goes wrong in the investor sense, right? I'm I'm gonna I'm gonna act as if this is a newer investor coming in, right?

Dwan Bent-Twyford 27:30

Yeah, no, they go, I want to be an investor. Yeah, for Jonathan Angelon. She's gonna fund me.

Jonathan Yoo 27:38

Yeah. So have the investment uh liquidity, right? To make sure you have at least six months of payments to go forward if something goes wrong and you lose a tenant or have to do turnover or whatever, right? So have that liquidity set aside. Do not put everything you have into one property, right? All the cash you have into one property. Um, I'd probably say be ready to spend money. And what I mean by that is invest in the property. You're gonna have repairs that need to be done. You're gonna have maintenance that needs to be done, you're gonna have improvements that need to be made, right, to the property to make it more palatable for the market to rent out.

Dwan Bent-Twyford 28:18

Okay.

Jonathan Yoo 28:19

Have that done, right? Be ready to spend on that. Get contractor quotes, get an idea of what it'll cost to get the property to a position for it to rent out well. Because another problem that's happening in the market right now, and I'm sure a lot of people have talked to you about it and you've seen it, it's harder to rent a property out right now in general. You're no longer, you're no longer, unless you're in like a very, very hot market and it's very specific markets, you're not getting top dollar long-term rents anymore.

Dwan Bent-Twyford 28:46

Yeah.

Jonathan Yoo 28:46

Right. You're you're you're having to discount a little bit. You're having to give a month free. You're having to do, you know, give certain appliances, this and that, right? So be prepared for that. It's more so what it is. Talk to a real estate agent, talk to Dawn, ask her about what it'll take to get the property up and running, right? Um, so be ready to spend on that, right? And then the third thing I would say is uh, and probably these are all, I think, equally as important going in, is make sure the numbers work. Right. And what I mean by that is make sure you're not buying above market, make sure you're trying to buy below market as much as possible.

Dwan Bent-Twyford 29:25

Yeah.

Jonathan Yoo 29:26

And make sure that the monthly payment is not just breaking even flat. Make sure you're getting a little bit of extra cash flow, 25%, 30% above the payment, so that that can go towards all your actual reserves that are needed to maintain the property. So two and three kind of go hand in hand, but also, you know, this is about prepping to buy. And I think that those three are probably the most important points for a new buyer.

Dwan Bent-Twyford 29:51

No, I agree. I think those are all really good tips. One thing I also like if someone is, if I'm uh a wholesaling, let's say uh a house supporter and they're gonna rehab it. One thing I always want to know too is like who's actually gonna rehab it. Are you personally gonna go on the weekends after you worked that week and rehab this house and you know be like a weekend warrior? Or do you have contractors? Do you have rates? Do you have people that can do the work for you? Like, what are you doing? Because so many people like buy houses, they've got the money, they have everything. Then they start rehabbing it because they want to do it themselves.

Jonathan Yoo 30:25

Yeah.

Dwan Bent-Twyford 30:25

Work the first weekend and they work the second weekend, which is now like you know, 15, 16 days straight from their job, and then they're tired, they don't want to go on a Sunday, and then they two or three weeks go by and they don't work on the property. Next thing you know, they're trying to get out from underneath it because they weren't prepared all the way.

Jonathan Yoo 30:44

Yeah, absolutely.

Dwan Bent-Twyford 30:47

But having the money ready and to spend and to go into it. I think that's really true because they and they always go over budget and they always take longer than you think.

Jonathan Yoo 30:56

Yep. 100% every time.

Dwan Bent-Twyford 30:58

So you gotta add like three months and add like whatever money you have, yeah. 25% more. And if those numbers work, I think you're all right.

Jonathan Yoo 31:07

Yeah, 100%. I think I think that's that's very sound advice. Um, especially right now where inflation affects everything, right? So you could be in the middle of a project and you could start or even be starting a project if you expect the budget to be a hundred thousand, and because the war started all of a sudden, everything's more expensive. Like you could be looking at a 110, 120, $130,000 budget now, just purely because of inflation and also the cost of labor, right? Just across the country. So that's all like definitely 100%. So that's why I'm saying like you have to buy the property below margin, right? Below the market. You have to have like a 20% buffer, 30% buffer of at least the ARV. Don't buy too close to what it's supposed to be because if you do that, you're just eating into your room and your equity, which is essentially supposed to be your cash, but it's gonna very quickly not become your cash if the project goes sideways.

Dwan Bent-Twyford 32:07

Oh yeah.

Jonathan Yoo 32:08

Yeah.

Dwan Bent-Twyford 32:09

I've had so many conversations like this with people, it's like, and like I can even think back, like I remember in COVID, um, the price of plywood like doubled.

Jonathan Yoo 32:20

Yeah.

Dwan Bent-Twyford 32:20

It's like, okay, if you're like a home builder and you're building a house with some scratch, you need, you know, 500 pieces of plywood and it just doubled in price. Like, where do you add that in?

Jonathan Yoo 32:31

Yeah.

Dwan Bent-Twyford 32:32

It just went up so much, it's like, oh my God, how are they charging so much money for everything now?

Jonathan Yoo 32:36

Yeah. And it it and it's it's real. So I think that it's very important, like you said, to just have that money aside and be ready. Everyone, I usually, and even for primary home buyers, I I really try to do my best to tell them not to do too low of a down payment. I know it exists. I know 0% down VA loans exist. I know 3.5% down FHA, 3% conventional. It all sounds great until the market is in a downturn. Because if you look at a market in a downturn,

Three Actionable Tips For New Investors

Jonathan Yoo 33:09

that 3.5%, 3%, 0%, you're underwater very, very quick.

Dwan Bent-Twyford 33:14

Yeah.

Jonathan Yoo 33:14

And all of a sudden, now you are 110% on LTV, right? And then if you go to try to sell, you have to put money in to sell it.

Dwan Bent-Twyford 33:23

Yeah.

Jonathan Yoo 33:24

Right. And that's money you don't have. And also when you're buying a property, like people always forget maintenance is expensive in general, whether it's an investment property or a primary, maintenance is expensive. Then you have taxes, you have insurance, you have supplemental tax bills that pop up, right? Out of nowhere, right? You get a school tax that's all of a sudden increase. They say you got to pay a $200 bill or a $1,000 bill. If you don't have that money readily available, guess what? You're gonna get penalties on penalties on penalties, and then it's gonna put a they're gonna put a lien on it. Like there's a lot of different things that can go wrong. So don't buy just because it's cheap, right? Don't buy just because you can buy it with a little percent, you know, little down payment. Really try to do the math in terms of what's my trajectory here, what's the long-term plan? Don't look at the next year, don't look at the next three years. You got to look at least five to 10 years, right? Five, I would say, is even like pushing it. Realistically, you'd probably want to look seven to 10 years and make sure that you have the you're gonna have the trajectory and the liquidity to go that forward, right? And um, a big part of this that is really real-world example is all the people in NorCal, San Francisco, and those places that worked at tech companies, right? Silicon Valley as well, but all those tech companies and such, a lot of those guys and girls were making 400, 500, a million dollars, and all of a sudden they get laid off because AI is so good at it.

Dwan Bent-Twyford 34:51

I know.

Jonathan Yoo 34:52

Right.

Dwan Bent-Twyford 34:52

And you have them to like Tennessee and Texas and places like that. It's like, good Lord.

Jonathan Yoo 34:59

Yeah. But if you look at those examples, that's a real world example of like you don't you really don't know what'll happen overnight. You really don't know what'll happen in a year, two years, three years, right? Because a lot of these people bought homes a year, three years ago thinking, uh, it's okay, right? I'm gonna have a job, they're never gonna lay me off. I make so much money, it's fine. But it's never guaranteed. And unfortunately, something like this rolls out, they lose their job. Now it's hard to get a new loan to buy something, and it's hard to refinance because you don't have the income coming in anymore. So a lot of those people are having to sell, you know, sell their houses.

Dwan Bent-Twyford 35:34

Yeah, a lot.

Jonathan Yoo 35:35

Yeah. So it's like when you if you ever get to that point, you don't want to be like you want to have equity in there to make sure that you can actually sell and get money back versus sell and put money in.

Dwan Bent-Twyford 35:45

No, I'm with you. I mean, my parents were probably the last generation that people that really could like work in a factory and like work for the man and retire and whatever. And there's still some people uh in my age group. I'm 67, so there's still people in my age group that have like work at factories and things like that. But for any generation down, like the man isn't something you can rely on. You have to rely on yourself. That's how I tell people to become a real estate investor. People always have to have that place to live, people have to have food, they have to have clothing, they have to have a room. Buy in real estate, invest in real estate, put your money into it, and once you get everything done and paid way down, if the work goes up or down, it doesn't make any difference to you. And it's a tan like you said, it's like a tangible thing. So I am always for 35 years, I've been investing and I've been preaching to people. Become an investor, become an investor. Now they can get money from you. If I teach them and you give them the money, it's the perfect world.

Jonathan Yoo 36:43

Done. Game over.

Dwan Bent-Twyford 36:46

I want to ask you a personal question.

Jonathan Yoo 36:48

Sure.

Dwan Bent-Twyford 36:49

What is your favorite band of all time?

Jonathan Yoo 36:52

My favorite band. Musical band?

Dwan Bent-Twyford 36:55

Yeah.

Jonathan Yoo 36:55

Okay. Um I grew up on I grew up on Lincoln Park. So there's a there's a very, very old, uh, not old, but like they don't exist anymore as as big, I think. Um they they lost a few members, but yeah, I was I grew up on their more rock style music.

Dwan Bent-Twyford 37:16

Who are you? Are you in your thirty thirties?

Jonathan Yoo 37:18

I I'm 32.

Dwan Bent-Twyford 37:20

Okay.

Jonathan Yoo 37:20

Yeah.

Dwan Bent-Twyford 37:21

My kids love Lincoln Park and they're all in their 30s. I like it too. Like whatever they listen to, I always like to.

Jonathan Yoo 37:27

Yeah, yeah. Yeah. But um I don't listen to them much anymore. These days I've I've I've transitioned more to uh just listening to podcasts and different people. I think it's just knowledge is becoming more important than I think music, right? So uh investing in that, I think time-wise, because we're so limited back in the day. Like when you're younger, you can always listen to music and you have time to do everything else. These days you you don't have time. So, you know, I think I think knowledge is more important. So I've just been listening to more podcasts and just news in terms of like markets, financial markets, you know, how everything's moving. Because everyone turns to me and asks me, Hey, I know you don't have a crystal ball, but where are rates going tomorrow? You know, like that's that's the question I get all the time.

Dwan Bent-Twyford 38:45

So I have to be what the rates go to.

Jonathan Yoo 38:48

I have to be ready. Yeah, I have to be ready to prepare, you know, to answer all those questions.

Dwan Bent-Twyford 38:53

Well, Lanure Park's a good choice. You can always I feel like you can always tell a lot about people by the kind of music that they listen to. Um, what's your favorite food?

Jonathan Yoo 39:01

My f

[Ad] Laugh Love Law

Jonathan Yoo 39:01

my favorite food is uh is Korean food. Yeah, yeah.

Dwan Bent-Twyford 39:07

I like um my favorite actual food is sushi.

Speaker 1 39:10

Oh, okay.

Dwan Bent-Twyford 39:11

I've had one thing for life, I'd eat sushi.

Speaker 1 39:13

Oh, that's amazing.

Dwan Bent-Twyford 39:14

I don't know, maybe Indian though. I like them equally as well.

Speaker 1 39:18

Yeah.

Dwan Bent-Twyford 39:18

So what is your next big goal with your company? What's your next big goal? And how can the wonderful world help you reach that goal?

Jonathan Yoo 39:30

Um, we are really investing a lot of time, energy, and money into uh transitioning more towards uh a tech stack. So um the the industry itself is very archaic. Uh

(Cont.) Three Actionable Tips For New Investors

Jonathan Yoo 39:44

and especially when you're talking about not the conventional world, but the non-conventional world is even more archaic. We're still people are still working through emails, people are still working through document reading manuals, right? So we are trying to create a new path away from that and have you know AI make everything more efficient to loan to close loans quicker, right? Um, and remove human errors, because that's always super frustrating. Uh, but then also be able to have a human touch to it, which I think is lacking. When you when you make everything AI, and people tell me this all the time, that you try to pick up a call to call someone, and then you talk to an AI

Building AI Speed Without Losing Humans

Jonathan Yoo 40:21

agent, you say speak to an agent, they said, in order to help you further, please specify your, and then you're like, okay, well, this is my situation. They go, sorry, we don't understand that. Like, you know, and and that's kind of that's kind of the the loop, it's the death loop that happens right now from you know, from from AI.

Speaker 1 40:38

Aid agent, I don't know.

Jonathan Yoo 40:39

Yeah, exactly. But but they but sometimes like they don't they don't even allow you to go agent, agent, agent, agent, agent, because they said, you know, please specify, please specify, please specify. Right. And so we're trying to find a fine line in between, you know, the robot world of AI and then the human world of of human touch and make it as comfortable as possible for consumers and borrowers to go through the process, um, especially in the investing world, because the personal touch, because even like in the investing world, people are gonna build relationships with you.

Speaker 1 41:11

Yeah, exactly.

Dwan Bent-Twyford 41:13

For convoy house because you have you, they like you, they're like, hey, I like the chance and he's like great. And they're gonna build a relationship with you. And yeah, the computer can do a lot of it, but those personal relationships, I think they still have to be built.

Jonathan Yoo 41:26

Absolutely, yeah, and that's kind of our focus. So keeping the personal touch, but um still having the efficiency of AI and and um we help you reach that goal, just send people to borrow. Yeah, come come through, go to convoyhomeloans.com and let us know you came from the show. And um, you know, definitely reach out to us in any form or shape of way. You could download our app on the Google App Store or Apple uh Apple App Store as well. Yeah, for sure. Yeah, and you could create an account. And if you need anything, you can send requests through there. Like, you know, we we built out an app to really be consumer and borrower friendly to try to create more ways of communication um and just to be able to keep the the line of communication open because I think that's where a lot of investors lack, right? They always go for the cheapest product, they always try to work with the cheapest company, cheapest this. And then what they realize is oh, that also means I'm getting the cheapest service. That means that if I need something, yeah, if I need something at 8 p.m. on a Friday, that person is not responding to me, right? That company's not responding. The bank's not responding to me, right? They'll say, wait till the next business day. So it's stuff like that that we're trying to fill a hole in and really trying to um cater to the investors, cater to clients because investment real estate happens so quickly, right? Especially the good deals, they happen very, very quickly. Once you get a hold of one, you either are you have to make a decision within within a day, within hours. Like, do I want this or am I dropping this? Right. Yeah.

Dwan Bent-Twyford 42:56

So in order to do that, work with me, we have a um like an app inside of my network called Team Dwander. And I'm like, listen, if you come across a deal on a Saturday and you get asked a question, just text your question and I'll get back to you. Because I know you could be sitting with a homeowner that's just trying to sell some houses and you've got questions, and everybody else in the world's clothes are they're automated and you need help like then.

Jonathan Yoo 43:21

Yep. And now you have another source. We'll we'll do the same thing. Yeah.

Dwan Bent-Twyford 43:25

Yeah. So I like to have people like this. One of the reasons that they like to work with me is because, you know, and like in the in the the group chat, like, is it me, my husband, my son, my daughter, we all in bed.

Speaker 1 43:36

Oh, I love that.

Dwan Bent-Twyford 43:42

And something's not right with the documents and they need help. And I'm like, gotcha, man.

Speaker 1 43:46

Yeah, exactly.

Dwan Bent-Twyford 43:48

We're not in a I just I don't feel like we're in a nine to five world anymore.

Jonathan Yoo 43:52

No, we're not. We're not. I think entrepreneurship was probably the way and the the best way for normal people. And I don't want to say normal in any bad way, but like if you're a W-2 employee working in nine to five, like the best way to become entrepreneurial is to invest in real estate.

Speaker 1 44:08

Exactly.

Jonathan Yoo 44:08

Because then then you're building something, you're building equity, you you can borrow against it, you can depreciate it. Like there's so many benefits to real estate. That's my number one passion, is that yeah.

Dwan Bent-Twyford 44:18

Okay, so there you go. DuadRipple.com. Opt in, take my quiz, and have a conversation with me. And then I'm gonna send you over here to 100%. Okay, the last thing is I want you to give us a word of wisdom, but just one single word.

Jonathan Yoo 44:36

One single word. It's also that's the the the single word that I struggle with most is patience.

Dwan Bent-Twyford 44:43

Are you that person that's like Lord? I want patience, I want it now.

Jonathan Yoo 44:49

No, I know if I I don't I'm careful with uh praying for patience because I know God will give me opportunities to be patient, not actual patience.

Dwan Bent-Twyford 44:55

Yeah, so I'm careful. Like, I want patience, I want it now. And I laugh and say, okay, just no, you're gonna get your way. That's gonna teach you patience.

Jonathan Yoo 45:07

Yeah, so I I I really try not to pray for it.

Dwan Bent-Twyford 45:09

He's relearning a lot.

Jonathan Yoo 45:11

Yeah, yeah. I I try not to pay for it, but it's something that I struggle with most because you know, I I run a business. We I have staff of like 50 people now. Um, you know, we we do a little

Word Of The Week Patience And Wrap

Jonathan Yoo 45:21

over a little over like a billion something a year, right? And we have done that for the last few years. So for us now, um, I want things to move a lot faster than they actually are, right? And I want everyone to have a good experience with us. I want all of my people to be on board, but unfortunately, employees sometimes and a lot of times will never care as much as the owners, right? So we we're always in the in the tug and pull of how much can we actually push them and encourage them to grow because it'll be good for them to grow, but then also at the same time take a step back and say, okay, I I can't push as hard. Because they need their day off. Like they they have to have their day off. They're not, they're not, this isn't, they're not an owner, right? So they're not, they don't have to be 24-7. They need the ability to be able to clock out and relax a little bit. They can't keep going.

Dwan Bent-Twyford 46:09

So nothing and nobody hate on me for this, but like this age group of like the Gen Z, they I have so yeah, my husband and I um are basically rehabbing an entire town in Iowa.

Speaker 2 46:23

Wow.

Dwan Bent-Twyford 46:24

In the town, I opened up an antique store, a clothing, a boutique boutique, clothing boutique, and a little coffee shop. And I'll get these like 20-year-old girls and they'll just be like, Oh, I need a day off on whatever. Oh, you know, the schedule says this, and then they'll just go, okay, and they'll just send me a text and say I quit. Did you just text me that you quit?

Speaker 1 46:45

Yeah.

Dwan Bent-Twyford 46:45

Seriously? Well, I have this or that. If I have to work this hour or that and I don't want to, I'm just gonna quit. I'm just like, who does that? Like, if I would have done that, my dad would have killed me.

Speaker 2 46:55

Yeah.

Dwan Bent-Twyford 46:58

So I have to get a learn a little more patience with this younger generation. My investors are all like, they're all good because they're in it to win it. They want to become an investor. But for my little personal stores that I have, I'm just like, Lord, help me.

Speaker 2 47:13

Yeah. Yeah.

Dwan Bent-Twyford 47:15

So patience. So um, so what I uh what what people do that listen to the podcast is um every week we have a word of the week from the guests, and I tell them to write the word on a little sticky and put it on their bathroom, and when they're brushing their teeth or whatever, just say patience, patience, patience, patience. So I actually just told you what patience means to me, but what does patience mean to you? Like what does that work mean to you?

Jonathan Yoo 47:39

Yeah, um, it's it's I think for everything going is so fast in my life, right? Especially as a business owner, um, especially at the the volume that we produce. Um, we're not a massive shop, but we're not a small shop. So I'm kind of in that awkward medium. So, but I want to be I want to be bigger, right? I know we we're I know there's greater plans ahead and there's greater things that we want to achieve. Um, but it's just a reminder to myself to always just stay grounded still, try to enjoy the process, and then you know, eventually we're gonna get there. But I need to have a little bit more patience of not jumping ahead of myself and trying to grasp at something that isn't ready for me, right? Because the door will open when it's really meant to. Yeah.

Dwan Bent-Twyford 48:29

Yeah, people that try to do too much can end up being out of business, you know.

Speaker 1 48:32

Exactly.

Dwan Bent-Twyford 48:33

Uh to grow too fast. Okay, so I like that. We're patient. I like that. So, everyone, that's our word of the week is patience. So we're gonna learn how to have patience. Well, I want to thank you so much for being on today, Jonathan. You are just delightful.

Jonathan Yoo 48:46

Thank you so much, John. I loved it. I loved it.

Dwan Bent-Twyford 48:49

Tell everybody real quick, one more time, how do they know the fastest way to find you?

Jonathan Yoo 48:53

Go to convoyhome loans.com and let us know you came from the show.

Dwan Bent-Twyford 48:56

Okay, that's easy enough. Convoyhome loans.com. All right, everybody, we will be back next week. Oh, also do me a favor if you enjoyed today's show. I want you to subscribe and like and follow and all the things, leave a five-star review and write something. Just write a sentence about how delightful we were. And uh just keep keep tuning in every month. We're in our eighth season. So we're in our eighth seasons. We're just about ready to crack two million downloads. So, I mean, we're like right there. So this show could put it over the edge. This could be let's do it.

Speaker 1 49:31

Let's do it.

Dwan Bent-Twyford 49:32

Like every show right now. It's like, okay, one of these shows is gonna be the one that's gonna put me over the the two million. So it might be you.

Speaker 1 49:38

I think you I hope so. I hope so.

Dwan Bent-Twyford 49:41

That would be so fun, wouldn't it?

Speaker 1 49:43

Yeah.

Dwan Bent-Twyford 49:44

So we'll be back next week. Same about time, same about channel. And remember that the truth is in the red letter. All right, everybody. Ciao.

Speaker 1 49:53

Thank you.